DIVESTURE (MGA) CASE STUDY
Client: American Collectors Insurance, a Managing General Agency (MGA) writing nearly $50MM of classic and antique automobile business.
Objective: To identify a potential acquisition candidate for the client, allowing the family shareholders to exit the business.
Our Process: Led by a senior advisor, Merger & Acquisition Services undertook the following initiatives:
- Worked with the owners to understand their rationale for selling the company and structure an appropriate exit strategy
- Assisted in writing a Confidential Informational Memorandum (CIM) including an operating model to be used by prospective buyers
- Utilized our firm’s industry contacts and proprietary database to create a marketing process designed to maximize value for the client
- Identified potential buyers, both strategic and financial, and presented them to the client for review
- Secured over 8 indications of interest for the client to review and analyze
- Led due diligence meetings for the client with a select group of prospective buyers
- Worked with both the client and prospective buyers in developing valuation models, return on equity scenarios and due diligence
- Analyzed the proposals with the client to assist them in assessing the best offer from multiple perspectives
- Assisted in negotiating the final terms of the transaction and structuring of the purchase agreement with the ultimate buyer
Result: The shareholders of American Collectors completed the sale of the MGA to NSM Group that included 100% of the proceeds to be paid in cash at closing and reflected a market multiple just over 10x the MGA’s EBITDA.